Seth Onyango, bird story agency
Fintech giant, Flutterwave has overcome legal challenges that threatened to cripple an ambitious growth strategy that made it the darling of venture capitalists internationally.
“After considering all the facts presented to this court, as well as my earlier ruling on the agency’s request for withdrawal of this suit, the withdrawal is hereby allowed and this suit is marked as withdrawn,” High Court Judge Nixon Sifuna said in a ruling handed down in Nairobi.
The judge criticized Kenya’s Assets Recovery Agency for initiating the case without completing investigations, deeming the action “inappropriate, negligent, reckless, and absurd”.
Flutterwave had grown to become an investor’s darling on the continent and the removal of legal challenges in the key East African markets sets the stage for a face-off with M-Pesa, the region’s mobile money behemoth.
The Nigerian-based company, which offers a range of payment solutions for individuals and businesses across Africa, faced a series of legal challenges in Kenya after the ARA accused it of money laundering in 2020 and froze its accounts.
Founded in 2016 by Iyinoluwa Aboyeji, Olugbenga Agboola, and Adeleke Adekoya, Flutterwave is headquartered in San Francisco and Lagos and is currently valued at some US$3 billion. That makes it the most highly valued startup in Africa, overtaking previous records set by OPay, a fintech firm backed by SoftBank, and Chipper Cash, a cross-border payments platform supported by FTX, (both were valued at US$ 2 billion, in 2022).
Flutterwave always denied the allegations brought by the ARA and challenged the court order, arguing that it had complied with all the regulatory requirements and obtained a license from the Central Bank of Kenya (CBK) in 2019.
After months of litigation by the ARA, the judgement cleared the way for the fintech firm to resume operations in Kenya. The company may also chase a much-anticipated initial public offering (IPO) which could see it listing its shares in the territories where it operates.
The end of Flutterwave’s legal woes could be a game changer in Kenya and East Africa, as the company seeks to expand its presence and compete with the dominant player, M-Pesa.
M-PESA, which is owned by Safaricom, the largest mobile network operator in Kenya, has more than 55 million users and processes over 80% of the country’s digital payments. It has extended its services to other countries in the region.
Kenya’s digital payments sector is often criticised for its complacency due to a lack of robust challenges to M-Pesa’s dominance.
Flutterwave operates in more than 30 African countries and supports over 30 currencies, making cross-border transactions and remittances easy. The service has partnered with global payment platforms such as PayPal, Stripe, and Visa, enabling its customers to access a wider range of payment options and markets.
The fintech startup also offers online checkout, e-commerce, invoicing, payment links, and virtual cards.
According to a report by the World Bank, Kenya has one of the highest fees for mobile money transactions in Africa, averaging 11% of the transaction value.
Flutterwave’s entry could significantly lower those fees as it chases its ambition to become the leading payment platform in Africa and beyond.
This story was originally published by bird story agency.